Abstract

Both the bid decision and the determination of the bid price are very important to every contractor. The importance of such decisions lies in the fact that, the success or failure of a contractor’s business depends on the outcomes derived from these decisions. The aim of this paper is to identify and analyze the factors which are believed to affect bidding and markup size decisions in the construction industry in Gaza Strip. A questionnaire survey elicited responses from 77 general contractors. The results indicated that, most of the contractors depend on subjective processes in making bid/no bid and markup size decisions are based on experience-based judgment. Some factors are considered important in both decisions while some other factors are considered important in one decision but not the other. The most important groups which affects bid no bid and mark up size were found to be client and consultant of the group, and conditions contributing to profitability of the group. The results also showed that, the current financial capability of the client, project size and financial status of the company were the main factors affecting bid no bid decisions. Regarding mark up size decision, it was found that the duration of project, political environment, and terms of payment were the main factors affecting the mark up decision. Some recommendations are proposed in this study.

Highlights

  • The construction sector is one of the key economic sectors and is the main force motivating the Palestinian national economy

  • The second important group in both decisions was project conditions contributing to profitability of the project and with higher importance assigned in bid/no bid decisions (RII=0.798) than markup decisions (RII=0.734)

  • This paper presents the findings of a comprehensive questionnaire survey conducted among 77 general contractors in the Gaza Strip

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Summary

Introduction

The construction sector is one of the key economic sectors and is the main force motivating the Palestinian national economy. Upon the establishment of the Palestinian National Authority and the assumption of its powers over the Palestinian territories in 1994, the construction sector has witnessed noticeable expansion and activities. This has resulted in the recovery of the construction contracting profession and subsidiary industries, has encouraged the investment of Palestinian expatriates’ capital in the local construction sector, and contributed to the creation of jobs for thousands of Palestinians. The construction sector has occupied the foremost position among the rest of sectors, mainly in the attraction of investments and creation of new jobs (World Bank 2006). The pressure on contractors bidding decisions has further increased in the last five years due to the current political situation which led to a sharp decrease in the number of the available projects (PCU 2009)

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